Here’s How I’m Playing the Shocking Nvidia Scandal

Detailed summary

The AI industry has lost its rock-star CEO and chief champion. How should investors respond to Jensen Huang’s departure?

The AI industry has lost its rock-star CEO and chief champion. How should investors respond to Jensen Huang’s departure?

It’s funny, but as I read it, Jensen Huang has come undone not because he was sleeping with a Chinese spy, but because of prosaic human-resources rules against relationships between the boss and employees reporting to them.

Initially, it looked like the Nvidia (NVDA) president and CEO would ride out the China-spy scandal. Despite the whiff of national-security risk and an investigation into alleged smuggling of restricted Nvidia chips into China, Huang was in the office taking meetings like normal. Even the president had his back.

It was only after a report that the Nvidia co-founder had also been in an extramarital relationship with Kimberly Powell, the company’s vice president of health care, that his position became untenable. The New York Times reported this second affair shortly after the bell on Wednesday, quickly followed by alerts from The Wall Street Journal that Huang was being ousted.

There are obviously good reasons to bar relationships between the boss and the people that the boss can order around. Some companies bar relations between any employees at all, even if they work in unrelated departments.

The second stance is going a bit far, if you ask me, to bar any intra-company pairing up at all. But there’s good reason for the first rule. There’s definitely an unpleasant power dynamic at work when there’s a chain of command, and the boss can compel someone to do something. That’s not to mention the potential for playing favorites on pay or projects – or being perceived by jealous rival workers to be doing so.

Why does this matter? Well, I’m trying to get a read on whether problems at Nvidia indicate broader problems in the semiconductor sector, and across the broader Artificial Intelligence (AI) buildout.

How far will this fallout spread? Is the edifice of the “central bank of Nvidia,” the company that has pumped so much circular funding…

As…

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